# Environmental Policies and Procedures

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2014-00220

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** February 4, 2014
- **Citation:** 79 FR 6740

## Text

DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Parts 1703, 1709, 1710, 1717, 1720, 1721, 1724, 1726, 1737, 1738, 1739, 1740, 1753, 1774, 1775, 1779, 1780, 1781, and 1782
Rural Business-Cooperative Service
Rural Housing Service
Rural Utilities Service
Farm Service Agency
7 CFR Parts 1924, 1940, 1942, 1944, 1948, 1951, 1955, 1962, 1970, and 1980
Rural Housing Service
7 CFR Parts 3550, 3560, 3565, 3570, and 3575
Rural Business-Cooperative Service
Rural Utilities Service
7 CFR Parts 4274, 4279, 4280, 4284, and 4290
RIN 0575-AC56
Environmental Policies and Procedures

AGENCY:

Rural Housing Service, Rural Business-Cooperative Service, Rural Utilities Service, Farm Service Agency, U.S. Department of Agriculture (USDA).

ACTION:

Notice of proposed rulemaking.

SUMMARY:

Rural Development, a mission area within the U.S. Department of Agriculture comprised of the Rural Housing Service (RHS), Rural Business-Cooperative Service (RBS) and Rural Utilities Service (RUS), hereafter referred to as the Agency, is proposing to unify and update environmental policies and procedures covering all Agency programs by consolidating two existing Agency regulations that implement the National Environmental Policy Act (NEPA) and other applicable environmental requirements. These rules supplement the regulations of the Council on Environmental Quality (CEQ), the regulations of the Advisory Council on Historic Preservation (ACHP), associated environmental statutes, Executive orders and Departmental Regulations. The majority of the proposed changes relate to the categorical exclusion provisions in the Agency's procedures for implementing NEPA. These proposed changes are intended to better align the Agency's regulations, particularly for those actions listed as categorical exclusions, to the Agency's current activities and recent experiences and to the CEQ's Memorandum for Heads of Federal Departments and Agencies entitled “Establishing, Applying, and Revising Categorical Exclusions under the National Environmental Policy Act” issued on November 23, 2010, and to consolidate the provisions of the Agency's two current NEPA rules at 7 CFR parts 1794 and 1940, subpart G.

DATES:

Comments on the proposed rule must be received on or before April 7, 2014. Comments on the reporting and recordkeeping aspects of this rule in accordance with the Paperwork Reduction Act of 1995 continue through April 7, 2014.

ADDRESSES:

You may submit comments to this rule by any of the following methods:

•
Federal eRulemaking Portal: http://www.regulations.gov
. Follow the instructions for submitting comments.

•
Mail:
Submit written comments via the U.S. Postal Service to the Branch Chief, Regulations and Paperwork Management Branch, U.S. Department of Agriculture, STOP 0742, 1400 Independence Avenue SW., Washington, DC 20250-0742.

•
Hand Delivery/Courier:
Submit written comments via Federal Express Mail or other courier service requiring a street address to the Branch Chief, Regulations and Paperwork Management Branch, U.S. Department of Agriculture, 300 7th Street SW., 7th Floor, Suite 701, Washington, DC 20024.

All written comments will be available for public inspection during regular work hours at the 300 7th Street SW., 7th Floor address listed above.

FOR FURTHER INFORMATION CONTACT:

Mark S. Plank, Director, Environmental and Engineering Staff, Rural Utilities Service, Stop 1571, 1400 Independence Ave. SW., Washington, DC 20250-1571; email:
Mark.Plank@wdc.usda.gov
; telephone: (202) 720-1649.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

This section describes NEPA requirements, including the different levels of environmental review, and a description of how the Agency makes a determination regarding the appropriate level of environmental review. It also describes the Agency's mission and its current NEPA-implementing regulations.

A. National Environmental Policy Act

NEPA (Pub. L. 91-190, 42 U.S.C. 4321-4370) establishes a national environmental policy to, among other things, “create and maintain conditions under which man and nature can exist in productive harmony” (42 U.S.C. 4331(a)); sets goals for the protection, maintenance, and enhancement of the environment; and provides a process for carrying out the policy and working toward those goals. NEPA also created the Council on Environmental Quality (CEQ), which was later directed, by Executive order, to promulgate binding regulations to guide all Federal agencies in preparation of agency-specific regulations for implementing NEPA (Executive Order No. 11514, “Protection and Enhancement of Environmental Quality” [March 5, 1970], as amended by Executive Order No. 11991, “Relating to Protection and Enhancement of Environmental Quality” [May 24, 1977]). The CEQ regulations can be found at 40 CFR 1500-1508 and are referenced in this proposed rule.

As set forth in CEQ's NEPA-implementing regulations, the NEPA process requires different levels of environmental review and analysis of Federal agency actions, depending on the nature of the proposed action and the context in which it would occur. The three levels of analysis are: Categorical exclusion (CE), environmental assessment (EA), and environmental impact statement (EIS).

A CE is a category of actions that each Federal agency determines, by regulation, do not individually or cumulatively have a significant effect on the human environment (40 CFR 1508.4). The agency's procedures must provide for “extraordinary circumstances” in which a normally categorically excluded action may have a significant environmental effect. Examples of Agency CEs are routine financial transactions including, but not limited to, refinancing of debt; loans for purchase of real estate or equipment; and small-scale construction. Even if a proposed action is classified by an agency as a CE, such proposed action is still screened for any extraordinary circumstances that would indicate a potential to have significant impacts. If a CE applies, and there are no extraordinary circumstances, the Federal agency typically documents that determination in the project file. If, however, a CE applies and the agency determines that there are extraordinary circumstances, the agency would proceed to prepare an EA or an EIS.

An EA is prepared to determine whether the impacts of a particular proposal might be significant (40 CFR 1508.9). In an EA, a Federal agency briefly describes the need for the proposal, alternatives to the proposal, and the potential environmental

impacts of the proposed agency action and alternatives to that action, including the no action alternative. An EA results in either a Finding of No Significant Impact (FONSI) or a determination that the environmental impact may be significant and therefore an EIS is required.

A Federal agency is required to prepare an EIS for any major Federal action that may significantly affect the quality of the human environment (NEPA, 42 U.S.C. 4332(2)(C)). The EIS must include a detailed evaluation of: (1) The environmental impacts of the proposed action; (2) any adverse environmental effects that cannot be avoided; (3) alternatives to the proposed action; (4) the relationship between local, short-term resource uses and the maintenance and enhancement of long-term ecosystem productivity; and (5) any irreversible and irretrievable commitments of resources. NEPA requires that this evaluation be started once a proposal is concrete enough to warrant analysis and must be completed at the earliest possible time to ensure that planning and implementation decisions reflect the consideration of environmental values.

B. Agency's Mission

By statutory authority, the Agency is the leading Federal advocate for rural America, administering a multitude of programs, ranging from housing and community facilities to infrastructure and business development. Its mission is to increase economic opportunity and improve the quality of life in rural communities by providing the leadership, infrastructure, venture capital, and technical support that enables rural communities to prosper. The Agency supports these communities in a dynamic global environment defined by the Internet revolution, and the rise of new technologies, products, and new markets.

To achieve its mission, the Agency provides financial support (including direct loans, grants, and loan guarantees) and technical assistance to help enhance the quality of life and provide the foundation for economic development in rural areas. Like all Federal agencies, the Agency is responsible for determining the appropriate level of review for every proposed action. As part of the Agency's environmental review responsibilities under NEPA, the Agency's responsible official examines an individual proposed action to determine whether it qualifies for a CE under the Agency's NEPA regulations. The Agency's process is consistent with that described in guidance issued by CEQ on establishing, applying, and revising CEs (“Final Guidance for Federal Departments and Agencies on Establishing, Applying, and Revising Categorical Exclusions Under the National Environmental Policy Act” (CEQ CE Guidance)(75 FR 75628 (2010)). This guidance states:

“When determining whether to use a categorical exclusion for a proposed activity, a Federal agency must carefully review the description of the proposed action to ensure that it fits within the category of actions described in the categorical exclusion. Next, the agency must consider the specific circumstances associated with the proposed activity, to rule out any extraordinary circumstances that might give rise to significant environmental effects requiring further analysis and documentation” in an EA or EIS (75 FR at 75631).

The Agency's existing and proposed regulations ensure that the Agency's responsible official follows the steps described by CEQ for determining whether a CE for a particular proposed action exists. The Agency requires applicants to describe their proposals in sufficient detail to enable the Agency to determine the required level of NEPA review. If the proposed action does not fall within an established CE or if there are extraordinary circumstances, the Agency's responsible official then determines if the action is one that normally requires the preparation of an EA or EIS. Those types of actions are specified in the Agency's existing and proposed regulations.

If a proposed action, which is not a CE, does not normally require the preparation of an EIS, the Agency's responsible official will proceed to prepare an EA to determine if the potential environmental impacts of the proposed action may be significant. If the Agency concludes, based on the EA, that the impacts would not be significant, the Agency will prepare and issue a FONSI. If, however, the Agency concludes that the impacts may be significant, the Agency's responsible official will proceed to issue a notice of intent to prepare an EIS.

The Agency's procedures for determining whether to apply a CE or to prepare an EA or EIS and the manner in which those determinations are documented are set forth in the Agency's existing and proposed NEPA regulations.

To achieve the Agency's mission and to improve the delivery of its programs, the Agency intends to consolidate and update the existing environmental regulations to eliminate confusion between the two existing NEPA regulations and to facilitate NEPA reviews.

C. Current Agency NEPA Regulations

Each Federal agency's NEPA implementing procedures are specific to the actions taken by that agency and supplement the CEQ regulations (40 CFR 1507.3). Both RHS/RBS and RUS have promulgated Agency NEPA regulations. The Agency also completes various other review requirements for its programs under the umbrella of NEPA, including historic preservation reviews under 16 U.S.C. 470f of the National Historic Preservation Act, and consultation on federally-listed species under 16 U.S.C. 1536 of the Endangered Species Act.

The environmental policies and procedures currently utilized by RHS and RBS to implement NEPA were published as a final rule by the Farmers Home Administration (FmHA) on January 30, 1984 (7 CFR part 1940, subpart G, 49 FR 3724) and were amended on September 19, 1988 (53 FR 36266). RHS and RBS are successor agencies to FmHA, which ceased to exist on October 20, 1994, pursuant to The Agricultural Reorganization Act of 1994 (Pub. L. 103-354). Also pursuant to this Act, the farm programs under FmHA were transferred to the Farm Service Agency (FSA) that was established by the 1994 USDA reorganization.

RUS was established as part of the same 1994 USDA reorganization that established RHS and RBS, and is comprised of Rural Electrification Administration (REA) programs combined with the Water and Waste Program from the former FmHA. The environmental policies and procedures currently applicable to RUS programs were published as a final rule on March 13, 1984, by the REA (7 CFR part 1794, 49 FR 9544), were revised and published as a final rule in 1998 (63 FR 68648) to accommodate the 1994 USDA reorganization, and have been amended through 2003 (68 FR 45157).

The Agency's existing regulations for implementing NEPA need to be updated to reflect the Agency's current structure and programs, CEQ guidance documents, and Executive orders. In addition, the Agency proposes to consolidate the Agency's approach to environmental reviews for all assistance programs within the USDA Rural Development mission area, rather than having separate NEPA procedures for RHS/RBS and RUS.

Under the proposed rule, 7 CFR part 1970 will replace 7 CFR part 1794 for RUS and 7 CFR part 1940, subpart G, for RBS and RHS. While 7 CFR part 1940, subpart G, will no longer apply to RHS

and RBS, it will continue to apply to FSA.

II. Purpose of the Proposed Agency NEPA Regulations

Under 7 CFR part 1970, subparts A through D, the Agency proposes to consolidate, simplify, and update the two existing NEPA rules. Although some substantive policy changes are being proposed to reflect recent environmental policies of Executive Orders and CEQ guidance, the Agency's main goal is to update and merge the two sets of existing regulations, rather than to promulgate new rules or requirements. The Agency believes that a consolidated environmental rule will be easier to read, understand, and use. In preparing the consolidated rule, the Agency sought to combine the requirements from both 7 CFR part 1940, subpart G, and 7 CFR part 1794 to eliminate redundancy; promote consistency among the RHS, RBS, and RUS programs; and reduce confusion on the part of applicants for Agency financial assistance and the public.

The proposed changes are intended to (1) better align the Agency's regulations with the CEQ NEPA regulations and recent guidance, and (2) update the provisions with respect to current technologies (e.g., renewable energy) and new and recent regulatory requirements.

The proposed consolidation encompasses the CEs currently in 7 CFR part 1940, subpart G, and in 7 CFR part 1794. In addition, the Agency is proposing to modify and add to its list of CEs in a manner consistent with CEQ regulations and guidance. CEQ encourages the development and use of CEs and has identified them as an “essential tool” in facilitating NEPA implementation so that more resource-intensive EAs and EISs can be “targeted toward proposed actions that truly have the potential to cause significant environmental impacts.” (CEQ CE Guidance, 75 FR at 75631). Appropriate reliance on CEs provides a reasonable, proportionate, and effective analysis for many proposed actions, thereby helping agencies reduce paperwork (40 CFR 1508.4) and delay (40 CFR 1508.5).

III. Invitation To Comment

The Agency encourages interested persons and organizations to submit written comments, which may include data, suggestions, or opinions. Commenters should include their name, address, and other appropriate contact information. Comments may be submitted by any of the means identified under
ADDRESSES
. Comments submitted by mail or hand delivery should be submitted in an unbound format, no larger than letter-size, suitable for copying and electronic filing. If confirmation of receipt is requested, a stamped, self-addressed, postcard or envelope should be enclosed. The Agency will consider all comments received during the comment period and will address comments in the preamble to the final regulation. Tribal consultation will be conducted during the public comment period for the proposed rule.

IV. Description of the Proposed Changes to the Agency's NEPA Regulations

The Agency is proposing both organizational and substantive changes to its NEPA-implementing regulations. These changes are described below. A section-by-section analysis of individual changes is provided in Section V.

A. Organizational Changes

Consolidation of the Agency's two existing rules for implementing the procedural provisions of NEPA and other applicable environmental requirements will simplify program application processes for applicants by making environmental requirements more clear and consistent across all programs.

In addition, under the proposed rule, NEPA procedures have been reorganized and revised to simplify provisions, as well as to provide more concise and comprehensive discussions of specific topics. In some cases, detail was removed because it relates primarily to internal Agency processes and thus is more appropriately addressed in staff instruction for Agency personnel or in separate guidance to applicants. For example, the Agency proposes to eliminate Exhibits A-M in 7 CFR part 1940, subpart G because these exhibits are internal guidance.

In other instances, additional clarification and detail were added to ensure consistency in NEPA compliance and implementation across all Agency programs. For example, additional detail was added to discussions of applicant responsibilities, definitions, actions subject to NEPA, limitations on actions during the NEPA process, scoping, public notices, and interagency cooperation.

The proposed NEPA regulations, which are intended to supplement the CEQ regulations, are organized into four subparts as described below:

Subpart A—Environmental Policies.
This subpart contains the environmental policies and procedures of the Agency that integrate NEPA, as amended, with the planning, environmental review processes, and consultation procedures required by the environmental statutes, regulations, and Executive orders applicable to Agency programs.

Subpart B—NEPA Categorical Exclusions (CE).
This subpart contains the descriptions of those categories of actions that the Agency has determined do not individually or cumulatively have a significant effect on the human environment. In consolidating and reorganizing the proposed CEs, the Agency grouped them by activity (e.g., routine financial actions) rather than by particular Agency program (e.g., Water and Waste or Community Facilities). The Agency took this approach to make clear that all CEs are applicable to each of the 86 programs the Agency currently administers, as long as the conditions within the CE are met and there are no extraordinary circumstances.

Subpart C—NEPA Environmental Assessments (EA).
This subpart describes actions that require the preparation of an EA to determine whether the impacts of a proposed action may be significant and thus whether preparation of an EIS is warranted. It also describes the requisite components of an EA and FONSI, and includes a provision on supplementing an EA.

Subpart D—NEPA Environmental Impact Statements (EIS).
This subpart describes actions for which the Agency will prepare an EIS. It also describes the contents of an EIS and a Record of Decision (ROD), which is the last step in the EIS process.

B. Substantive Changes

The Agency is also proposing consolidation of and substantive changes to its CEs, classification criteria and procedures for preparing EAs, and the preparation of EISs by third-party contractors. These proposed changes are described below.

1. Categorical Exclusions

The Agency is proposing to modify and add a number of CEs. In addition to combining the existing RHS/RBS and RUS CEs, the Agency is proposing some revisions to the existing CEs and is proposing new CEs. Further, the Agency recognizes that some CEs have a potential for significant environmental impacts because of the possible presence of extraordinary circumstances, such as sensitive environmental resources. For these CEs, the Agency is proposing to require applicants to submit environmental documentation regarding their requests for financial assistance. Finally, the Agency is proposing to add several CEs based on the experience of the Agency

and, in accordance with 40 CFR 1507.3(a), other Federal agencies with similar programs.

In addition to modifying existing CEs and adding new CEs, the Agency is proposing to eliminate several CEs currently listed in the RHS/RBS and RUS NEPA regulations because the Agency no longer undertakes those types of actions as a result of the 1994 USDA reorganization. These proposed modifications are described in more detail below. The section-by-section analysis in Section V.B describes the basis for each proposed CE as well as for the elimination of some CEs, currently specified in either 7 CFR part 1794 or 7 CFR part 1940, subpart G.

a.
New and Revised CEs.
Most of the proposed CEs are found in the existing Agency NEPA regulations. However, the Agency is proposing to revise the language of some existing CEs to reflect current agency programs. These revisions clarify, and in some instances, expand the applicability of the CEs and make the scope and quantitative aspects of the CEs more consistent with those adopted by other Federal agencies engaged in similar or identical actions. Such expansion includes the re-classification of Class I EAs, currently provided for in the existing RHS and RBS regulations as EAs for actions with low potential to effect environmental quality (7 CFR 1940.311), as CEs. Based on the EAs and FONSIs that have been prepared for these actions since 1984, the Agency has concluded that these types of activities, absent the presence of extraordinary circumstances, do not individually or cumulatively have significant environmental effects and thus are more appropriately classified as CEs.

In addition, the Agency is proposing new CEs to address Agency programs that have been enacted since the existing NEPA regulations were last updated. The range of Agency activities and programs has changed and expanded since the Agency's NEPA regulations were promulgated and later amended, growing to more than 86 programs in 2012.

In particular, there has been tremendous growth and development in the areas of energy efficiency and renewable energy. Over the last several years, this growth has given the Agency and other Federal agencies (e.g., the Department of Energy (DOE)), extensive experience with assessing the potential environmental impacts of these technologies. With the increase in development of energy efficiency and renewable energy, has come an increase in the number of applications to the Agency for financial assistance to promote energy efficiency and alternative energy development.

The Agency's proposal to add CEs based on the Agency's own experience as well as that of other Federal agencies is consistent with the CEQ CE Guidance. As CEQ noted in that guidance, a Federal agency may “substantiate a categorical exclusion of its own based on another agency's experience with a comparable categorical exclusion and the administrative record developed when the other agency's categorical exclusion was established” (CEQ CE Guidance, 75 FR at 75634). For several of the new CEs being proposed by the Agency, the Agency is relying on DOE's extensive experience with energy projects, which DOE has used in recent revisions to its own NEPA rule (76 FR 63764 (2011)). DOE's revised NEPA rule included several modifications and additions to its CEs, particularly relating to energy efficiency and renewable energy technologies. The Agency has reviewed DOE's CEs and the basis for those CEs, and has determined that many DOE actions eligible for a CE are comparable to actions undertaken by the Agency.

In the text of the proposed CEs, and as is done in the CEs in its existing regulations, the Agency uses the terms “small,” “small-scale,” “minimal,” and “minor” to limit the types and potential impacts of the activities that are eligible for a CE. While the Agency does not intend to define these terms specifically, in determining whether a particular proposed action qualifies for a CE, the Agency considers those terms in the context of a particular proposal, including its proposed size and location.

In assessing whether these terms apply to a particular proposed action, the Agency currently considers and would continue to consider factors such as industry norms, the relationship of the proposed action to similar types of development in the vicinity of the proposed action, and expected outputs of emissions or waste, in addition to the magnitude of the proposal. When considering the physical size of a proposed facility, for example, Agency environmental staff reviews the surrounding land uses, the scale of the proposed facility relative to existing development, and the capacity of existing roads and other infrastructure to support the proposed action. This approach is similar to and consistent with that undertaken by DOE in the application of its CEs, as described in its recent NEPA rulemaking (76 FR 63764, 63768 (2011)).

The proposed rule also uses the term “previously disturbed or developed” to limit potential environmental impacts of CEs. The Agency has determined, based on experience, that the potential for certain actions to have significant impacts on the human environment is generally avoided when the action takes place within a previously disturbed or previously developed area. ”Previously disturbed or developed” refers to land that has been changed such that its functioning ecological processes have been and remain altered by human activity. The phrase encompasses areas that have been transformed from natural cover to non-native species or a managed state, including, but not limited to, utility and electric power transmission corridors and rights-of-way, and other areas where active utilities and currently used roads are readily available. This approach is similar to and consistent with that undertaken by DOE in the application of its CEs, as described in its recent NEPA rulemaking (76 FR 63764, 63768 (2011)).

For some proposed CEs, the Agency proposes the use of quantitative limitations or thresholds (acres, miles, feet, megawatts, kilovolts) to help further limit the potential for significant environmental impacts. These threshold values are based on the Agency's past experience in applying its existing CEs and preparing EAs that resulted in FONSIs, where actual project sizes could be correlated to impacts. The Agency's experience has shown that the proposal size is directly linked to impacts, where the greater the potential area affected, the greater the potential for significant impacts. In many cases, the threshold values are the same as those used in the existing Agency NEPA regulations. In other instances, however, changes in thresholds have been proposed to promote consistency among Agency programs and with the environmental requirements of other Federal agencies' programs that are similar in nature.

The Agency has reviewed and deliberated each proposed CE with respect to concept, coverage, applicability, and wording; and carefully examined the portion of the administrative record associated with each CE to ensure that the proposed CE fulfills the goal of balancing increased administrative efficiency with the avoidance of misinterpretations and misapplications of exclusionary language that could lead to non-compliance with NEPA requirements. The Agency has concluded that the proposed CEs encompass activities that have no inherent potential for significant impacts. Many of the Agency's conclusions regarding specific categorical exclusions are supported by

other Federal agencies that have established CEs for activities similar in nature, scope, and impact to those contemplated by the Agency. Based on the Agency's experience and that of other Federal agencies, the Agency determined that, in the absence of extraordinary circumstances, its proposed CEs will not individually or cumulatively pose significant environmental impacts.

b. Documentation Requirements.
The Agency's proposed CEs are divided into two sections. The proposed CEs in § 1970.53 involve no or minimal construction and generally involve routine financial actions, information gathering activities, or modifications to existing facilities. For that reason, these CEs, due to their narrow scope, do not have the potential for extraordinary circumstances. Therefore, the CEs listed in proposed § 1970.53 would not require applicants to provide environmental documentation with their applications. Nonetheless, applicants may be required to provide environmental documentation at the Agency's request.

The CEs listed in proposed § 1970.54 would require applicants to submit environmental documentation with their applications for financial assistance. In the Agency's view, these proposed CEs involving small-scale development have an increased potential for disturbance of sensitive resources. Thus, the Agency proposes to require applicants to submit information regarding their proposals, including detailed site plans, location maps, and environmental surveys, to allow the Agency to determine whether there could be extraordinary circumstances.

An environmental report is currently required for CEs listed in RUS's NEPA regulation at 7 CFR 1794.22. Not all of those existing CEs would require documentation under the Agency's proposed NEPA rule, based on the Agency's conclusion that, for certain actions, environmental documentation is not necessary because of the low probability for extraordinary circumstances.

However, the Agency also concluded that some CEs that do not currently require an environmental report under the existing regulations at 7 CFR 1794.21 do have the potential for extraordinary circumstances. Thus, under the proposed rule, those proposed actions would require an applicant to submit environmental documentation. It should be noted that the environmental documentation required for CEs proposed in § 1970.54 is less than the information currently required for an environmental report (see 7 CFR 1794.32; RUS Bulletins 1794A-600 and 1794A-602). For those RHS and RBS Class I EA actions that are now proposed as CEs under part 1970, the documentation requirements would be similar to that provided in the RD 1940-20 form currently required under § 1940.311.

Differences between the existing and proposed CEs are addressed in more detail in the section-by-section analysis in Section V.B.

c. Multi-Tier Actions.
Subpart B also provides that the Agency's approval of the initial funding to multi-tier entities (primary recipients) would be classified as CEs. Commitments of financial assistance to primary recipients who will, in turn, provide financial assistance in the future to qualified second tier or ultimate recipients under certain terms and conditions (§ 1970.55) would be subject to further environmental review by the Agency. The Agency will conduct its review in accordance with this part and on a case-by-case basis at the time when projects and ultimate beneficiaries are defined.

d. Eliminated CEs.
The Agency is proposing to remove several types of actions from its list of CEs. Most of these relate to programs that are no longer under the purview of the Agency, except as noted below:

The following existing CEs involving subdivisions are being eliminated:

•
§ 1940.310(b)(2)
The approval of an individual building lot that is located on a scattered site and either not part of a subdivision or within a subdivision not requiring Rural Development's approval

•
§ 1940.310(b)(5)
The approval of a subdivision that consists of four or fewer lots and is not part of, or associated with, building lots or subdivisions

•
§ 1940.310(b)(8)
The financing of housing construction or the approval of lots in a previously approved Rural Development subdivision. Please note that the financing of the housing construction portion of this CE has been incorporated into § 1970.53(c)(4).

The Agency proposes to eliminate §§ 1940.310(c)(3) and 1794.21(c)(1), which refer to project management actions relating to invitation for bids, contract award, and the actual physical commencement of construction activities. These actions occur after the Agency has completed the NEPA process and has obligated funds for the project. Thus, these actions would have already been addressed as part of the request for financial assistance, and a separate section is not necessary.

The Agency also proposes to eliminate §§ 1940.310(d)(1) through 1940.310(d)(11), which are programs administered by FSA and are not eligible for Agency financing.

Finally, the Agency proposes to eliminate § 1794.22(b)(6), which refers to previously categorically excluded loan closing and servicing activities for which the purpose, operation, location, or design may have changed. The Agency recognizes that a previously approved action that is later altered would need to be re-examined to determine if the original application of the CE was still appropriate given the change in purpose, operation, location, or design. If the CE was no longer appropriate, the Agency would proceed to prepare an EA, or if necessary, an EIS.

All other CEs that are currently contained in 7 CFR parts 1940, subpart G, and 1794 are proposed for inclusion in the proposed CEs in § 1970.53 or 1970.54. For example, § 1794.21(b)(26), which refers to “New bulk commodity storage and associated handling facilities within existing fossil-fueled generating station boundaries for the purpose of co-firing bio-fuels and refuse derived fuels” is now included in proposed § 1970.54(a), “Small-scale site-specific development,” as long as the conditions of the CE are met and there are no extraordinary circumstances. For proposed § 1970.54(a) in particular, the Agency intends that proposals for financial assistance that fall within the stated parameters of the CE be eligible for a CE even though the proposed action may not be specifically listed as an example.

2. EA Policy

The Agency is proposing to eliminate the distinction in the RHS/RBS regulations for Class I and Class II EAs and the distinction in the RUS regulations for EAs with and without scoping. The Agency is also proposing to provide a formal process for the public review of EAs. These changes are described below.

a. Elimination of EA Categories.
In the existing regulations, RHS and RBS distinguish between Class I and Class II EAs. Class I EAs are defined as those actions that are not listed as CEs and that require the preparation of an EA to determine if the proposal will have a significant impact on the environment (7 CFR 1940.311). Class II EAs “have the potential for resulting in more varied and substantial environmental impacts” and thus require a “more detailed” EA to determine if the proposed action requires the preparation of an EIS (7 CFR 1940.312). Further, RUS lists proposed actions that will normally require an EA (7 CFR 1794.23) and separately lists proposed actions that

require a “scoping procedure” in the development of the EA (7 CFR 1794.24).

To simplify its EA process and to make its NEPA regulations consistent with the CEQ regulations (which do not recognize different EA classifications), the Agency is proposing to eliminate these two EA classes. Under the proposed rule, the Agency would prepare EAs for all forms of financial assistance unless such actions are CEs or require the preparation of an EIS (proposed § 1970.101(b)). The proposed rule recognizes, however, that “the amount of information and level of analysis provided in the EA must be commensurate with the magnitude of the proposal's activities and its potential to affect the quality of the human environment” (proposed § 1970.102(a)).

As described more fully in the section-by-section analysis in Section V.C, several actions that were previously Class I EAs in the RHS and RBS regulations are now proposed as CEs because the Agency has concluded that those types of actions do not have the potential for imposing significant environmental impacts. All but one of these actions would require the applicant to submit environmental documentation to determine the presence or absence of extraordinary circumstances. Other actions that fall under the Class I EA classification would be eliminated because those actions are no longer undertaken by the Agency (i.e., the actions now fall under FSA's jurisdiction).

Under the existing regulations, at the discretion of the Agency, the Agency may require scoping meetings depending on the complexity of the proposal. The Agency is now proposing to remove the distinction between proposals normally requiring an EA and those requiring an EA with scoping. This does not represent a change in procedure, but continues to allow the Agency to exercise its discretion. Accordingly, the Agency determined that a separate classification is not necessary.

Except for proposals including electric transmission facilities of 230 kV or more nominal operating voltage and 20 miles or more in length, the remainder of the actions specifically listed in § 1940.311 and § 1940.312 (for RHS and RBS) and in § 1794.23 and § 1794.24 (for RUS) would require the preparation of an EA under the proposed NEPA rule. While the existing regulations define the specific proposals that require the preparation of an EA, the proposed rule simply states that all forms of financial assistance require the preparation of an EA unless they are categorically excluded or required to be the subject of an EIS. In light of the large number and varying types of programs implemented by the Agency, the proposed generic approach provides assurance that EAs will be prepared for proposals that may not have been previously encountered by the Agency and for future Agency programs.

b. Public Review of EAs.
The Agency is proposing to establish a formal EA public notice and participation process that is consistent with the CEQ regulations and the existing part 1794, recent case law, and other Federal agencies' requirements for EAs. The Agency's proposed procedures would require EAs to be made available for public review and comment prior to completion and issuance of a FONSI, if the Agency determines that on the basis of the EA there are no significant impacts. Although the CEQ regulations require agencies to involve the public in the preparation of EAs “to the extent practicable” (40 CFR 1501.4(b)), there is no formal commenting requirement in those regulations. Federal agencies have typically declined to implement a public review and comment process similar to that required for EISs. Recently, however, courts have held that Federal agencies must permit some level of public participation when issuing an EA. Specifically, courts have held that a complete failure to involve or inform the public about an agency's preparation of an EA would violate NEPA.
See, e.g., California Trout
v.
Federal Energy Regulatory Commission,
572 F.3d 1003 (9th Cir. 2009).

In keeping with the spirit of NEPA and the CEQ regulations and to follow the dictates of case law, the Agency is proposing a formal commenting process for EAs similar to that which is currently required under part 1794. This process would involve notification of the availability of an EA and the establishment of a 14- to 30-day public comment period. DOE has a similar provision in its NEPA regulations (10 CFR 1021.301(d)).

3. Third-Party Contracting

The Agency is proposing to improve efficiency in the NEPA process by revising the manner in which professional services of contractors to support the preparation of an EIS are procured. Under the proposed rule, applicants for financial assistance under all Agency programs would be required to fund EISs. In accordance with the CEQ regulations, applicants may undertake the necessary paperwork for the solicitation of a field of candidates under the Agency's direction and the Agency would select and approve all contractors (see proposed § 1970.152). Although funding for an EIS by applicants is currently allowed under § 1794.61, there is no similar provision in 7 CFR part 1940, subpart G. The proposed rule would allow all Agency programs to use a third-party contracting approach for the preparation of EISs.

Third-party contracting offers a more efficient approach for the preparation of an EIS, however it does not change current Agency responsibilities. The Agency would also remain responsible for: Selecting the EIS contractor; participating in the preparation of the EIS; and independently evaluating the scope and content of the EIS. This action is proposed to improve both the efficiency and the effectiveness of the Agency's environmental review processes and represents an important contribution to the Agency's ongoing efforts to streamline its operations.

V. Section-by-Section Analysis of the Proposed Agency NEPA Regulation

This section provides a detailed discussion of the proposed Agency NEPA regulation. For each section, the content of the proposed rule is briefly described. The Agency then discusses the manner in which the proposed rule relates to existing Agency NEPA regulations in part 1970, subpart G, and/or in part 1794. In most cases, the proposed rule is the same as an existing regulation or has been modified slightly for clarity or consistency between the RHS/RBS and RUS NEPA regulations. Where the Agency proposes substantive changes to its NEPA regulations, an explanation for the change is provided.

A. Subpart A—Environmental Policies

Purpose, Applicability, and Scope (§ 1970.1)

This proposed section describes the purpose of the Agency's environmental policies and procedures, which is to ensure compliance with NEPA and other applicable environmental requirements. It also explains that the Agency's environmental policies and procedures supplement the CEQ NEPA regulations (40 CFR parts 1500 through 1508).

This proposed section is similar to the information found in §§ 1940.301 and 1794.1 (Purpose); however, it has now been consolidated and reorganized into three separate paragraphs relating to purpose, applicability, and scope. The applicability paragraph is new and clarifies that the proposed rule applies to all Agency programs (RHS, RBS, and RUS). It also expands the existing discussion of scope to indicate that the Agency will take into account CEQ's

guidance and memoranda interpreting NEPA to the extent appropriate. In addition, this section incorporates and is in conformity with the procedures of Section 106 of the National Historic Preservation Act (NHPA) and Section 7 of the Endangered Species Act (ESA).

Some information in the existing regulations has been reorganized. Specifically, information relating to authorities, previously contained in § 1940.301(c), has been moved to proposed § 1970.3 (Authority). Information contained in § 1940.301(d) through (h), which covered a variety of topics (e.g., objectives and coordination with other agencies, responsible officials, covered actions, completion of an environmental review, and public involvement), are now captured elsewhere in the proposed rule, including: §§ 1970.4 (Policies), 1970.5 (Responsible Parties), 1970.8 (Actions Requiring Environmental Review), 1970.11 (Timing of the Environmental Review), and 1970.14 (Public Involvement).

By consolidating the requirements found in the existing regulations, this proposed section helps provide for a single, consistent, streamlined process that all Agency programs will follow in complying with NEPA and other applicable environmental requirements. NHPA and ESA are now specifically referenced because these are important environmental reviews the Agency completes for its programs under the umbrella of NEPA.

Authority (§ 1970.3)

This proposed section describes the many environmental laws, regulations, Executive orders, and USDA regulations that comprise the authority for the proposed 7 CFR part 1970. The list of authorities includes those found in the existing regulations (§§ 1940.301(c) and 1794.2), and has been updated and expanded to reflect new requirements that have been enacted since the existing regulations were published. These include new statutes, Executive Orders, Departmental regulations and a Departmental manual. In addition, two statutes referenced in § 1940.301(c) are not proposed for inclusion in the proposed rule because they are only applicable to the FSA, which is no longer part of the Agency. The implementing regulations of those two statutes are: Title 7, Part 658, Code of Federal Regulations, Department of Agriculture, Soil Conservation Service, Farmland Protection Policy; and Title 7, part 12, Code of Federal Regulations, Highly Erodible Land and Wetland Conservation.

Policies (§ 1970.4)

This proposed section states that it is Agency policy that applicant proposals must, whenever practicable, avoid or minimize adverse environmental impacts, conversion of wetlands and important farmlands, and development in floodplains where a practicable alternative
1

exists to meet development needs. Further, it is Agency policy to encourage reuse of real property defined as “brownfields” where possible; lend support to initiatives, resolutions, and programs designed to maximize international cooperation in addressing environmental problems; and consider opportunities to reduce greenhouse gas emissions. This proposed section is a consolidation of §§ 1940.303 (General policy) relating to the Agency decision-making process and the need to consider environmental impacts and alternatives early in the process; 1940.304 (Special policy) including special policies relating to land use and sensitive environmental resources; and 1940.305 (Policy implementation) relating to Agency responsibilities for environmental impact analysis, natural resource management, intergovernmental initiatives, and other protected resources. There is no analogous section in part 1794. The proposed section has also been updated to reflect new USDA policies, such as using the NEPA process, to the extent possible, to identify and encourage opportunities to reduce greenhouse gas emissions.

1
“Practicable alternative” is the term used in Executive order 11988, Floodplain Management. NEPA requires consideration of “reasonable” alternatives in EAs and EISs.

Responsible Parties (§ 1970.5)

This proposed section describes the responsibilities of the Agency and applicants. The Agency is responsible for all environmental decisions and findings related to its actions, and for compliance with all environmental laws, regulations, and Executive orders. The Agency responsibilities described are consistent with those identified in the CEQ regulations at 40 CFR 1506.5 (Agency responsibility).

With respect to the Agency's responsibilities, this proposed section is similar to § 1794.5 relating to the Agency's responsibility to comply with all environmental laws and Agency programs. It also includes the general Agency responsibilities found in 7 CFR part 1940, subpart G, but does not include most of the specific descriptions of Agency responsibilities found in §§ 1940.306 (National Office), 1940.307 (State Office), 1940.308 (District and County Office levels), and 1940.316, describing the duties of responsible officials specific to the environmental review process. These provisions were eliminated because the information concerns internal agency policy and procedures.

In addition, the proposed section highlights specific Agency responsibilities relating to mitigation measures. While these are not new to Agency NEPA practices, they are more clearly described in the proposed rule in order to be consistent with CEQ regulations and provide clarity to applicants and Agency staff. These responsibilities are consistent with the CEQ regulations (40 CFR 1505.2(c) and 1505.3) and with recent CEQ guidance on mitigation and monitoring (Final Guidance for Federal Departments and Agencies on the Appropriate Use of Mitigation and Monitoring and Clarifying the Appropriate Use of Mitigated Findings of No Significant Impact, 76 FR 3843 (2010)). In particular, the proposed rule makes it clear that the Agency will include mitigation measures, as identified in the environmental review documentation, in Agency loan and grant commitment documents and that the Agency, guaranteed lender, or multi-tier primary recipients are responsible for monitoring and tracking the implementation, maintenance, and effectiveness of any required mitigation measures.

Provisions relating to the Agency's responsibility as a lead or cooperating agency are currently found in §§ 1940.325 (relating to being a cooperating agency), 1940.326 (related to being a lead agency), and 1794.14 (related to interagency involvement). Rather than repeating the CEQ regulations with regard to the definition and role of lead and cooperating agencies, however, the Agency proposes to simply reference the CEQ regulations in the proposed rule.

With respect to applicant responsibilities, most of the provisions in §§ 1940.309 and 1794.10 relating to an applicant's responsibility to prepare applicable environmental documentation are included in this proposed section. The Agency also proposes two additions. First, the Agency proposes to specify when it is appropriate for an applicant to coordinate and consult with state, Federal, and tribal agencies under Section 106 of NHPA. The circumstances in which an applicant may contact state, Federal, and tribal agencies directly is not addressed in the existing regulations and has been the

source of some confusion among Agency staff and applicants.

In this section, the Agency also proposes to provide additional detail on and clarification of applicant's responsibilities relating to the type and adequacy of environmental information that must be submitted to the Agency in support of a request for financial assistance (e.g., environmental review information, supporting technical studies, or an EA). Reference to Agency forms (Request for Environmental Information) included in § 1940.309 has been eliminated because they will no longer be used.

The proposed section also describes the obligation of an applicant to assist the Agency in preparing an EIS such as conducting public involvement activities, issuing notices, and funding third-party contractors. Finally, this proposed section specifies that the Agency's consideration of a request for financial assistance may be affected by the applicant's willingness to cooperate with the Agency on environmental compliance.

Definitions and Acronyms (§ 1970.6)

This proposed section includes many, but not all, of the definitions found in the existing regulations at §§ 1940.302 and 1794.6. A list of acronyms relevant to the environmental review process within the Agency is also proposed to aid readers.

The existing regulations include some defined terms that have not been included in the proposed regulation because they are specific to only one Agency program, are no longer needed or used, are not directly related to the environmental review process, and/or are already defined in the CEQ regulations. The following terms defined in the existing regulations are not included in the proposed regulation:

• From 7 CFR 1940.302—“environmental review documents” (refers to Agency forms no longer used), “flood/flooding,” (specific to one resource and better suited to staff instruction and/or applicant guidance), “floodplains” (critical action floodplain component is proposed for inclusion in the critical action definition), “indirect impacts” (defined in CEQ regulations under “effects” in 40 CFR 1508.8), “mitigation measure” (defined in CEQ regulations under “mitigation” in 40 CFR § 1508.20), “practicable” alternative (to be consistent with CEQ regulations that address “reasonable” alternatives at § 1502.14), “preparer of environmental review documents” (proposed for inclusion in staff instruction), and “water resource project” (specific to one program).

• From 7 CFR 1794.6—“Environmental Report,” “equivalent dwelling unit,” “important land resources,” “load design,” “multiplexing center,” “Natural Resource Management Guide,” “Supervisory Control and Data Acquisition System,” and “Third-Party Consultant.” “Third-party consultant” is addressed under third-party contracting in proposed §§ 1970.5, 1970.11, and 1970.152. The rest of the terms are specific to RUS programs and, in some instances, refer to internal documents (Environmental Reports and Natural Resource Management Guides) that are not referenced in the proposed regulations. Such terms are better placed in staff instruction and/or applicant guidance.

The following definitions have been retained in the proposed rule, although some have been modified for additional clarification or to ensure applicability to all Agency programs. These are: “Emergency” (replaces “emergency situation”) and “no-action alternative” in § 1940.302; and “applicant,” “construction work plan,” “distributed resources” (replaces “distributed generation”), “environmental review,” “loan/system designs” (replaces “loan design”), and “preliminary architect/engineering report” (replaces “preliminary engineering report”) in § 1794.6.

New definitions are proposed for the following terms: “Agency,” “critical action,” “design professionals,” “financial assistance,” “guaranteed lender”, “historic property,” “Indian tribe,” “multi-tier recipient,” and “loan servicing actions.” Such terms define actions (critical action, loan-servicing action), entities (multi-tier recipients, guaranteed lender, design professionals), and other terms not previously defined, but that are important to environmental policies and procedures within the Agency.

Actions Requiring Environmental Review (§ 1970.8)

This proposed section identifies the types of actions that the Agency considers to be major Federal actions subject to the requirements of NEPA and other applicable environmental requirements.

This proposed section is based on and further clarifies information found in § 1794.20 regarding parameters that will help Agency staff determine whether the applicant has sufficient control over the proposal to make the proposal subject to the requirements of NEPA and other applicable environmental requirements. Currently, § 1970.8 reiterates what is stated in § 1794.20 in that actions for which the applicant has less than 5 percent ownership control are not considered federal actions subject to this part. The agency determined that an inconsistency existed in § 1794.21(b)(17) in that a 5 percent or less ownership control was classified as a CE. The requirements in this proposed section are also similar to those in existing § 1794.3 and three sections in 7 CR part 1940, subpart G: §§ 1940.301(h), 1940.311, and 1940.312.

Section 1970.8(b)(2)(ii) provides that all Loan-servicing actions, including all consents or approvals given by an Agency, are major Federal actions. The consents and approvals of an Agency to be deemed major Federal actions would include, but not be limited to, consents and approvals given in connection with an entity that has previously received Agency funding and is required to seek Agency consent or approval under its existing agreements with the Agency as a prerequisite to receiving funding from another source. Under existing § 1794.3, RUS's approvals were deemed not to be major Federal actions by RUS. However, in order to have a more consistent analytical approach among agencies within USDA, under the proposed rule all Agency consents and approvals, including all consents and approvals given by RUS, will be deemed to be major Federal actions. Although an Agency's loan-servicing actions are deemed major Federal actions under § 1970.8(b)(2), the proposed rule provides that an Agency's loan-servicing actions may be classified as a CE under § 1970.53(a)(5).

This proposed section also recognizes the need to address certain major Federal actions that occur outside the borders of the United States, and identifies the geographic locations where NEPA and other applicable environmental requirements apply. NEPA applies not only to actions proposed within the United States, but also to actions proposed in any other commonwealth, territory, or possession of the U.S. such as Guam, Federated States of Micronesia, Republics of the Marshall Islands and of Palau, U.S. Virgin Islands, Commonwealth of the Northern Mariana Islands, and Puerto Rico. The Republic of Marshall Islands, the Federated States of Micronesia, and the Republic of Palau, in particular, are subject to Compacts of Free Association with the U.S. These compacts are Federal laws and specify that NEPA is generally applicable to major Federal actions that are proposed within those countries. See
http://www.usa.gov/Agencies/State_and_Territories.shtml.
This proposed section has been added to clarify NEPA's geographic

applicability outside of the U.S. to territories or associated states of the U.S.

Levels of Environmental Review (§ 1970.9)

This proposed section identifies three classes of actions and the related levels of environmental review for applicant proposals and Agency actions. The proposed section also requires applicants to describe their proposals in sufficient detail such that the Agency can properly determine the required level of review. The determination of the level of environmental review is not itself an action that requires NEPA review.

While the proposed section has no analogous sections in either 7 CFR parts 1794 or 1940, subpart G, information relating to the three levels of review is included in separate sections on CEs, EAs, and EISs (§§ 1970.310 through 1940.313—CEs, Class I and Class II EAs, and EISs, respectively; and §§ 1794.21 through 1794.25—CEs with and without Environmental Report, EAs with and without scoping, and EISs, respectively).

This proposed section was added (1) to consolidate information regarding the three levels of review and to make that information consistent with the CEQ regulations; (2) to describe the content and organization of the Agency's environmental policies and procedures; (3) to recognize that all aspects of a proposed action and proposals that are related to each other in such a way as to be a single course of action (connected actions) must be evaluated in a single environmental document (e.g., an Environmental Questionnaire, an EA, or an EIS), and (4) to address multi-year Telecommunication Program Loan/System Designs and multi-year Electric Program Construction Work Plans.

Raising the Level of Environmental Review (§ 1970.10)

This proposed section identifies the conditions that could trigger the need for a higher level of review than that classified in subparts B (CE) or C (EA) of the proposed rule. These conditions include site-specific environmental conditions or scientific controversy. In such situations, the Agency will determine whether extraordinary circumstances, as defined in § 1970.52, or the potential for significant environmental impacts warrant a higher level of review (e.g., a CE action would be raised to the level of an EA review, or an EA action would be raised to the level of an EIS review).

There are no analogous sections in 7 CFR parts 1940, subpart G, or 1794. While § 1940.319(g) acknowledges the potential for controversy and describes how environmental controversy should be addressed, it requires completion of a Class II EA in such circumstances. As has been noted previously, the distinction between Class I and Class II EAs in 7 CFR part 1940 has been eliminated. However, this proposed section makes it clear that an action that may be a Class I EA under the existing 7 CFR part 1940, subpart G, and that is now proposed to be a CE could require the preparation of an EA (or an EIS) if there are extraordinary circumstances related to the proposal (e.g., presence of sensitive resources or scientific controversy). The Agency is solely responsible for making this determination.

Timing of the Environmental Review Process (§ 1970.11)

The requirements in this proposed section are similar to §§ 1940.315, 1794.11, 1794.44, 1794.64, and 1794.73. Information relating to timing, previously contained in multiple sections in 7 CFR part 1794, based on the level of environmental review, is proposed for consolidation into this proposed section. Much of the detail in 7 CFR part 1940 relating to the Agency pre-application process and associated forms are proposed for elimination because those programs have been transferred to the FSA. This proposed section has also been revised to make it clear that the obligation of funds is directly tied to the conclusion of the environmental review process. It provides the specific steps that must be completed before the environmental review process is formally concluded.

The Agency is also proposing to add a provision relating to third-party contracting in this proposed section. Consistent with the CEQ regulations (40 CFR 1506.5(c)) and the practices of other agencies such as the U.S. Department of Energy (10 CFR 1021.215(d) and 1021.310) and the U.S. Environmental Protection Agency (40 CFR 6.303), the Agency is proposing to require applicants to solicit and procure professional services of third-party contractors to assist in the preparation of an EIS. The third-party contracting process is addressed in proposed § 1970.152, and the Agency's basis for this addition is described in Section V.C. below.

Proposed § 1970.11 makes it clear that the Agency is responsible for selecting a third-party EIS contractor and that applicants may not procure the services of any EIS contractor without approval by the Agency. This provision was added to ensure that the Agency would be in control of the preparation of an EIS.

Limitations on Actions During the NEPA Process (§ 1970.12)

This proposed section provides that applicants may not take actions concerning a proposal that may have an environmental impact or that would limit or affect the Agency's decision until the Agency's review process has been concluded. The requirements in this proposed section are consistent with CEQ regulations (40 CFR 1506.1) and similar to the existing regulations at §§ 1940.309(e) (relating to responsibilities of the applicant) and 1794.15 (Limitations on actions during the EIS process).

The proposed section allows the Agency to deny financial assistance where an applicant has been found to have engaged in anticipatory demolition as that term is used in the NHPA (Section 110(k)) referring to a historic property that may be purposefully destroyed or irreparably harmed. It also includes a provision regarding ongoing construction activities. Occasionally, applicants have applied for Agency financial assistance on a project after construction has started. Examples include when funding from another source has been withdrawn or the applicant incurs a cost overrun before construction is complete. The Agency has put in place stringent requirements to assure that the applicant is not attempting to avoid environmental compliance requirements. The proposed section describes the requirements that would apply in these types of circumstances.

Finally, this proposed section includes a discussion of when an applicant, with the prior written consent of the Agency, may make minimal expenditures in furtherance of a proposal prior to the completion of the NEPA process. This section is similar to that found in § 1794.15 (there is no analogous discussion in 7 CFR part 1940, subpart G). The proposed section is consistent with the CEQ regulations (40 CFR 1506.1(d)), which specifically allow for RUS (as successor to the Rural Electrification Administration (REA)) “approval of minimal expenditures not affecting the environment (e.g., long leadtime equipment and purchase options) made by non-governmental entities seeking loans from [RUS].” A specific reference to this CEQ provision is included in the proposed rule.

Consideration of Alternatives (§ 1970.13)

This proposed section provides that the Agency should consider all

reasonable alternatives when conducting a NEPA analysis. The Agency will also consider technical and economic feasibility when determining whether an alternative is reasonable. It also requires evaluation of the “No Action” alternative, at a minimum, for proposals subject to 7 CFR part 1970, subpart C (EAs). For proposals subject to 7 CFR part 1970, subpart D (EISs), the requirements of 40 CFR 1502.14 (Alternatives Including the Proposed Action) must be followed with respect to evaluation of reasonable alternatives.

This proposed section also recognizes that the level of analysis of alternatives will depend on the nature and complexity of the proposal. For example, an EA for a small project with limited potential environmental impacts is likely to need a less robust alternatives analysis than an EA or an EIS for a multi-faceted project with the potential for large impacts to sensitive resources. In some cases, analyzing only the proposed action and the No Action alternative may be appropriate.

The requirements in this proposed section are similar to those in § 1794.12. However, the factors the Agency will consider in determining whether an alternative is reasonable have been modified. The factors found in § 1794.12, while potentially applicable, are more specific to RUS programs (e.g., size, scope, state of technology; legal and socioeconomic concerns; availability of resources; and timing). For that reason, the Agency proposes to state more generally that factors such as economic and technical feasibility will be taken into account in determining whether a particular alternative should be considered reasonable. Additional details or examples are more appropriate for and will be provided in staff instruction and/or applicant guidance.

While there is no analogous section in 7 CFR part 1940, subpart G, existing § 1940.312(g) and (h) define “No Action” and “practicable alternative,” respectively. “Practicable alternative” is the term used in Executive Order 11988, Floodplain Management; the CEQ regulations require analysis of all “reasonable” alternatives (40 CFR 1502.14). In the existing regulations, § 1940.312(h) identifies three types of alternatives that must be analyzed to determine whether a “practicable alternative” exists, including alternative project sites or designs, projects with benefits similar to the proposed action, and the no action alternative. While these three types of alternatives are consistent with the range of “reasonable” alternatives that might be evaluated in an Agency EA or EIS, the modifier “practicable” is not used in this proposed rule in order to be consistent with the CEQ regulations.

Public Involvement (§ 1970.14)

This proposed section describes how the Agency will meet its responsibility to involve the public including minority or low-income populations, and consult with other agencies. To accomplish this, the Agency will publish notices, conduct meetings, and use other means as necessary to inform the public regarding the proposed action and associated NEPA process. This section also describes the scoping process, including scoping meetings, agency responsibilities for notifying the public, making documents publicly available, and the handling of public comments.

The requirements in this proposed section are similar to those currently found in §§ 1940.331 and 1794.13. However, the proposed section includes several revisions. One important revision is the elimination of references to Class I and Class II EAs in 7 CFR part 1940 and EAs with and without scoping in 7 CFR part 1794 as discussed previously. Accordingly, under the proposed section, scoping will be required for all EAs. This will fulfill the requirements and the spirit of NEPA as well as provide certainty to Agency staff, applicants, and other interested parties. While scoping is required for all EAs under the proposed section, the requirement for scoping meetings, previously identified for EAs with scoping under part 1794, is now at the Agency's discretion.

The proposed rule also requires public review of EAs. This provision is consistent with the requirements of 7 CFR part 1794, but represents a change from 7 CFR part 1940, which specifies no formal public involvement process for EAs. The section has also been updated to identify other appropriate methods of public involvement such as posting information on the Internet or using other electronic media.

The proposed section specifies the role of applicants in supporting the Agency's public involvement activities, including outreach to minority or low income populations and participation in consultation with Federal, state and local agencies; Federally recognized American Indian tribes and Alaska Native organizations; Native Hawaiian organizations; and interested parties. To assist Agency staff in reaching a wider and more diverse public, the proposed rule requires greater applicant support for outreach efforts than is described in the existing regulations. However, as a practical matter, Agency staff currently seeks and receives such support from applicants on an informal basis. The proposed rule would codify this practice. Additional information on scoping is provided in proposed § 1970.153, Notice of Intent and Scoping.

Interagency Cooperation (§ 1970.15)

This proposed section provides that the Agency will, when practicable, eliminate duplication of Federal, State, and local procedures by coordinating with other Federal agencies; adopting appropriate environmental documents prepared for or by other Federal agencies; cooperating with State and local governments, such as in the preparation of joint documents prepared under a given State Environmental Policy Act (SEPA); and incorporating other environmental documents by reference or adopting other documents in accordance with 40 CFR 1502.21 and 1506.3.

The requirements in this proposed section consolidate information previously found in multiple sections within the existing regulations, including §§ 1794.71, 1794.72, 1794.74, 1940.324 through 1940.329, and 1940.334. With respect to the sections currently found in 7 CFR part 1940, much of the detail relating to responsibilities as a lead and cooperating agency, incorporation by reference, and compliance with SEPAs has been eliminated, although the general requirements have been retained. The detailed information regarding compliance procedures is more appropriate for and will be included in staff instruction and/or applicant guidance.

Mitigation (§ 1970.16)

This proposed section consolidates information in the existing regulations pertaining to mitigation, and specifically addresses the monitoring of mitigation commitments. It also requires that all mitigation measures be included in Agency commitment and decision documents. The requirements in this proposed section are consistent with those in the existing § 1794.17. Although there is no analogous section in 7 CFR part 1940, subpart G, mitigation is defined in § 1940.302(f)), mitigation measures are discussed as part of Class II EAs in § 1940.318, and monitoring is the subject of § 1940.330. In practice, the Agency has typically considered and imposed mitigation measures where appropriate. Accordingly, the Agency is proposing to codify its ongoing commitment to mitigation and to mitigation monitoring in particular in this proposed rule.

Programmatic Analyses and Tiering (§ 1970.17)

This proposed section requires the Agency to consider preparing programmatic level environmental impact analyses for new programs or major changes to programs if better decision making will be fostered, or tiering if it would result in a reduction in delay and paperwork in accordance with 40 CFR 1502.20. As described in the CEQ regulations, a programmatic NEPA document refers to a broad-scope EIS or EA that identifies and assesses the environmental impacts of an agency program. Tiering, as defined in 40 CFR 1508.28, refers to the coverage of general matters in a broader EIS (policy or national programs) with subsequent narrower statements or environmental analyses incorporating by reference the general discussions and concentrating solely on issues specific to the statement subsequently prepared. Agencies are encouraged to tier their EISs to eliminate repetitive discussion of the same issues and focus on issues ripe for decision at each level of the environmental review (40 CFR 1502.20).

The requirements in this proposed section are consistent with the existing § § 1940.327 and 1794.16 related to tiering. However, information has been added to clarify for applicants when the Agency would consider the preparation of a programmatic analysis.

Emergencies (§ 1970.18)

This proposed section provides that when an emergency exists and the Agency determines that it is necessary to take urgently needed actions, the Agency may take actions necessary to control the immediate impacts of the emergency before preparing an environmental impact analysis and any required documentation. “Emergency actions” are defined in the proposed rule as those actions that are urgently needed to return damaged facilities to service and to mitigate harm to life, property, or important natural or cultural resources.

The requirements in this proposed section are similar to the existing § 1940.332. However, the proposed rule distinguishes among an urgent response, a CE or EA level action, and an EIS level action. It also eliminates the distinction between Class I and Class II EAs found in the existing regulations for reasons discussed above, and includes a definition of emergency action. There is no analogous section in 7 CFR part 1794. In accordance with 40 CFR 1506.11, if emergency circumstances make it necessary to take an action for an EIS level action, the Agency will contact CEQ about alternative arrangements.

B. Subpart B—Categorical Exclusions

Applying CEs (§ 1970.51)

This proposed section provides that the actions listed in §§ 1970.53 through 1970.55 are classes of actions that the Agency has determined do not normally individually or cumulatively have a significant effect on the environment. For an action to meet the requirements of a categorical exclusion: (1) An action must fit within the classes of actions listed in §§ 1970.53 through 1970.55; (2) there must be no extraordinary circumstances related to the proposal; and (3) the proposal must not be connected to other actions with potentially significant impacts.

The proposed regulation states that most of the CEs listed apply to any program of the Agency; only a few apply to a particular program because the specified activity occurs only under that program. In addition, a proposed action that consists of one or more components may be categorically excluded only if all components of the proposed action are eligible for a CE. For example, a proposal to rehabilitate an existing structure (§ 1970.53(c)(2)) and install a small solar electric project (§ 1970.53(d)(5)) could be categorically excluded because both components of the proposed action fall within a proposed CE.

Failure to comply with 7 CFR part 1970, subpart B will postpone further consideration of an applicant's proposal until such compliance is achieved or the applicant withdraws the proposal. If compliance is not achieved, the Agency will deny the request for financial assistance.

The requirements in the proposed section are similar to the existing §§ 1940.310(a) through (d) and 1940.317, and expand on §§ 1794.30 and 1794.31, which make a general reference to RUS CEs and their classification. The reference and discussion relating to connected actions is new, and has been added to the proposed rule to be consistent with the CEQ NEPA regulations (40 CFR 1508.18).

Extraordinary Circumstances (§ 1970.52)

This proposed section defines extraordinary circumstances as unique situations presented by specific proposals, such as characteristics of the geographic area affected by the proposal, scientific controversy about the environmental effects of the proposal, uncertain effects or effects involving unique or unknown risks, and unresolved conflicts concerning alternate uses of available resources within the meaning of § 102(2)(E) of NEPA. The section provides examples of what the Agency considers to be extraordinary circumstances. In the presence of extraordinary circumstances, an action that may fall within the definition of a CE will be the subject of an EA or an EIS prepared in accordance with, 7 CFR part 1970, subparts C and D.

The proposed section is similar to the existing 7 CFR 1940.310(a) and 1940.317(e), except that § 1940.317(e)(9), (10), and (11) relating to important farmland, prime forest lands, and prime rangelands are no longer listed as extraordinary circumstances. In accordance with the Farmland Protection Policy Act, however, actions that propose to convert important farmland to nonagricultural lands are still required to evaluate other practicable alternatives. In addition, the provisions in § 1940.311(d)(1) requiring the preparation of an EA for a proposal involving environmental controversy has been added to proposed § 1970.52.

The listing of extraordinary circumstances has also been expanded from 7 CFR part 1940 to include three new situations: (1) Any violation of applicable Federal, state, or local statutory, regulatory, permit, or Executive order requirements for environment, safety, and health; (2) certain activities relating to the management of Resource Conservation and Recovery Act regulated wastes; and (3) any proposal likely to cause uncontrolled or unpermitted releases of hazardous substances, pollutants, contaminants, or petroleum and natural gas products. While the Agency has considered these circumstances in practice, the Agency determined that they should be included in the formal rule.

There is no analogous section in 7 CFR part 1794, although “extraordinary circumstances” are referenced in §§ 1794.21 and 1794.30.

CEs Involving No or Minimal Construction (§ 1970.53)

The Agency has determined, based on experience, that the potential for actions to have significant impacts on the human environment is generally avoided when the action: (1) Includes no construction or no significant alteration of ambient conditions (including air and water emissions); (2) takes place within a previously disturbed or previously developed area; or (3) would be small-scale in nature with only localized impacts in an area that is limited in size based on a specific

threshold(s) (e.g., acreage) set by the Agency. The use and meaning of certain qualifying provisions, such as small-scale, are discussed in Section IV.

The CEs in this proposed section are for proposals that involve no or minimal alterations in the physical environment and typically occur on previously disturbed or developed land. They include routine financial actions, information gathering activities, and modifications to existing facilities. It is the Agency's view that the CEs in this proposed section typically do not involve extraordinary circumstances and have not resulted in significant environmental impacts in the past. For these reasons, applicants will not normally be required to provide environmental documentation on the proposed actions included in this section beyond the project description that is part of any application. However, the Agency may request additional environmental documentation from the applicant if the Agency determines that additional information is needed for the Agency to determine the appropriate level of NEPA review.

Most of the CEs in proposed § 1970.53 are the same as those currently found in the RHS/RBS and RUS regulations; a few new CEs are also proposed. Table 1 lists all of the proposed CEs in § 1970.53 and indicates whether they were derived from existing Agency CEs (and if so, where) or whether they are new. Table 1 also lists relevant Class I EAs, now classified as CEs (see Section V.C for additional detail).

The explanation and justification for proposing the new CEs in § 1970.53 is provided in Table 2. Some of the proposed new CEs are based on Agency experience in preparing EAs that have always resulted in FONSIs for these or similar types of proposals; some proposed CEs are based on a CE promulgated by another Federal agency for a similar type of proposal. As noted in Section IV, the adoption of CEs promulgated by other agencies is encouraged by the CEQ CE Guidance (75 FR 75628 (2010)).

Some RHS/RBS CE actions are not included in the proposed rule. Such actions are not included because they are administered by FSA and not eligible for Agency funding or they are included in proposed § 1970.53. These are:

§ 1940.310(d)(1) Financial assistance for the purchase of an existing farm, or an enlargement to one, provided no shifts in land use are proposed beyond the limits stated in paragraphs (d)(10) and (11) of this section;

§ 1940.310(d)(2) Financial assistance for the purchase of livestock and essential farm equipment, including crop storing and drying equipment, provided such equipment is not to be used to accommodate shifts in land use beyond the limits stated in paragraphs (d)(10) and (11) of this section;

§ 1940.310(d)(3) Financial assistance for (i) the payment of annual operating expenses, which does not cover activities specifically addressed in this section or §§ 1940.311 or 1940.312 of this subpart; (ii) family living expenses; and (iii) refinancing debts;

§ 1940.310(d)(4) Financial assistance for the construction of essential farm dwellings and service buildings of modest design and cost, as well as repairs and improvements to them;

§ 1940.310(d)(5) Financial assistance for onsite water supply facilities to serve a farm dwelling, farm buildings, and livestock needs;

§ 1940.310(d)(6) Financial assistance for the installation or enlargement of irrigation facilities, including storage reservoirs, diversion dams, wells, pumping plants, canals, pipelines, and sprinklers, designed to irrigate less than 80 acres, provided that neither a State water quality standard, a property listed or potentially eligible for listing on the National Register of Historic Places, a river or portion of a river included in, or designated for, potential addition to the Wild and Scenic Rivers System, nor a wetland is affected. If a wetland is affected, the application will fall under Class II as defined in § 1940.312 of this subpart. Potential effects to a water quality standard, an historic property or the Wild and Scenic Rivers System require that a review be initiated under a Class I assessment as specified in § 1940.317(g) of this subpart.

§ 1940.310(d)(7) Financial assistance that solely involves the replacement or restoration of irrigation facilities, to include those facilities described in paragraph (d)(6) of this section, with minimal change in use, size, capacity, or location from the original facility(s) provided that neither a State water quality standard, a property listed or potentially eligible for listing on the National Register of Historic Places, a river or portion of a river included in or designated for potential addition to the Wild and Scenic Rivers System, nor a wetland is affected. If a wetland is affected, the application will fall under Class II as defined in § 1940.312 of this subpart. Potential effects to a water quality standard, an historic property, or the Wild and Scenic Rivers System require that a Class I assessment be completed as specified in § 1940.317(g) of this subpart. Also, to qualify for this exclusion, the facilities to be replaced or restored must have been used for similar irrigation purposes at least two out of the last three consecutive growing seasons. Otherwise, the action will be viewed as an installation of irrigation facilities.

§ 1940.310(d)(8) Financial assistance for the development of farm ponds or lakes of no more than 5 acres in size, provided that, neither a State water quality standard, a property listed or potentially eligible for listing on the National Register of Historic Places, a river or portion of a river included in or designated for potential addition to the Wild and Scenic Rivers System, nor a wetland is affected. If a wetland is affected, the application will fall under Class II as defined in § 1940.312 of this subpart. Potential effects to a water quality standard, an historic property, or the Wild and Scenic Rivers System require that a review be initiated under a Class I assessment as specified in § 1940.317(g) of this subpart;

§ 1940.310(d)(9) Financial assistance for the conversion of (i) land in agricultural production to pastures or forests, or (ii) pastures to forests;

§ 1940.310(d)(10) Financial assistance for land-clearing operations of no more than 15 acres, provided no wetlands are affected, and financial assistance for any amount of land involved in tree harvesting conducted on a sustained yield basis and according to a Federal, State or other governmental unit approved forestry management and marketing plan; and

§ 1940.310(d)(11) Financial assistance for the conversion of no more than 160 acres of pasture to agricultural production, provided that in a conversion to agricultural production no State water quality standard or wetlands are affected. If a wetland is affected, the application will fall under Class II as defined in § 1940.312 of this subpart. If a water quality standard would be impaired or antidegradation requirement not met, a Class I assessment is required as specified in § 1940.317(g) of this subpart.

Table 1—Sources for Proposed Categorical Exclusions in § 1970.53

Proposed categorical exclusions
7 CFR part 1970

Source: RHS/RBS regulations
(7 CFR part 1940-G)

Source: RUS
regulations
(7 CFR part 1794)

§ 1970.53 Categorical Exclusions Involving No or Minimal Construction

(no documentation required)

§ 1970.53(a) Routine Financial Actions

§ 1970.53(a)(1) Refinancing of debt

§ 1940.310(c)(1).
§ 1940.310(d)(3).

§ 1970.53(a)(2) Purchase, transfer, lease or other acquisition of real property with no or minimal change in use

§ 1940.310(b)(1)
§ 1940.310(b)(9)
§ 1940.310(c)(1).
§ 1940.310(c)(2).
§ 1940.310(d)(1).

§ 1794.21(b)(1).
§ 1794.22(b)(7).

§ 1970.53(a)(3) Purchase, transfer or lease of personal property or fixtures with no or minimal change in operations

§ 1940.310(c)(1)
§ 1940.310(c)(5)
§ 1940.310(d)(2)

§ 1794.21(b)(1).
§ 1794.21(b)(13).
§ 1794.21(c)(2).

§ 1970.53(a)(4) Financial assistance for operating (working) capital for an existing operation to support day-to-day expenses

§ 1940.310(c)(1).
§ 1940.310(d)(3).

§ 1970.53(a)(5) Actions taken by Agency after provision of financial assistance involving no or minimal construction or change in operations

§ 1940.310(e)(2).
Class I EAs: § 1940.311(d)(2) and § 1940.311(d)(3).

§ 1794.21(b)(2).
§ 1794.21(c)(4).

§ 1970.53(a)(6) Rural Business Investment Program Actions
1940.310(c)(7)

§ 1970.53(a)(7) Guaranteed underwriting loans
New CE. See Table 2.

§ 1970.53(b) Information Gathering and Technical Assistance

§ 1970.53(b)(1) Information gathering, data analysis, document preparation, and information dissemination

§ 1940.310(e)(1)
§ 1940.310(b)(10)

§ 1794.21(a)(1).
§ 1794.21(b)(11).
§ 1794.21(c)(3).

§ 1970.53(b)(2) Technical advice, training, planning assistance and capacity building

§ 1940.310(b)(4)
§ 1940.310(b)(6).
§ 1940.310(c)(4).
§ 1940.310(e)(1).

§ 1794.21(c)(3).

§ 1970.53(b)(3) Site characterization, environmental testing, and monitoring with no significant alteration of existing ambient conditions
§ 1940.310(e)(1)

§ 1794.21(b)(10).
§ 1794.21(b)(11).

§ 1970.53(c) Small-Scale Construction and Minor Modification Proposals

§ 1970.53(c)(1) Minor modifications or revisions to previously approved projects where such activities do not significantly alter the purpose, operation, location, or design of the project as originally approved

§ 1940.310(c)(6)
Class I EA: § 1940.311(d)(2).

§ 1794.21(c)(4).

§ 1970.53(c)(2) Repair, upgrade, or replacement of equipment or fixtures in existing structures to improve habitability, increase energy efficiency, or reduce pollution

§ 1940.310(b)(3)
§ 1940.310(b)(7)
§ 1940.310(c)(2)
§ 1940.310(d)(4).

§ 1794.21(a)(4).
§ 1794.21(b)(20).
§ 1794.21(b)(22).

§ 1970.53(c)(3) Any internal modification or minimal external modification, restoration, renovation, maintenance and replacement in-kind to an existing facility or structure

§ 1940.310(b)(3)
§ 1940.310(b)(7)
§ 1940.310(c)(2)

§ 1794.21(b)(3).
§ 1794.21(b)(5).
§ 1794.21(b)(6).
§ 1794.21(b)(7).
§ 1794.21(b)(9).
§ 1794.22(b)(1).

§ 1970.53(c)(4) Construction of or improvements to a single-family dwelling or a multi-family housing project serving up to four families, except when financing is provided through a Rural Housing Site Loan

§ 1940.310(b)(1).
§ 1940.310(b)(3).
§ 1940.310(b)(7).
§ 1940.310(b)(8).

§ 1970.53(c)(5) Siting, construction, and operation of new or additional water supply wells for residential, farm, or livestock use
§ 1940.310(d)(5)

§ 1794.21(b)(23).
§ 1794.22(b)(5) EA: § 1794.22(c)(1).

§ 1970.53(c)(6) Modifications of an existing water supply well to restore production in existing water well fields where there would be no drawdown other than in the immediate vicinity of the pumping well, no resulting long-term decline of the water table, and no degradation of the aquifer from the new or replacement well

§ 1794.21(b)(23).

§ 1970.53(c)(7) New utility service connections to individual users or construction of utility lines or associated components where the applicant has no control over the placement of the utility facilities

§ 1794.21(b)(16).

§ 1970.53(c)(8) Conversion of land in agricultural production to pastureland or forests, or conversion of pastureland to forest
§ 1940.310(d)(9)

§ 1970.53(c)(9) Land-clearing operations of no more than 15 acres
§ 1940.310(d)(10)

§ 1970.53(c)(10) Conversion of no more than 160 acres of pastureland to agricultural production.
§ 1940.310(d)(11)

§ 1970.53(d) Small Energy or Telecommunications Proposals

§ 1970.53(d)(1) Changes to existing telecommunication facilities or electric distribution and transmission lines that involve pole replacement or structural components where either the same or substantially equivalent support structures at the approximate existing support structure location are used

§ 1794.22(a)(5).

§ 1970.53(d)(2) Phase or voltage conversions, reconductoring, or upgrading of existing electric distribution lines or telecommunication facilities

§ 1794.21(b)(15).

§ 1970.53(d)(3) Addition of telecommunication cables and related facilities to electric transmission and distribution structures
New CE. See Table 2.

§ 1970.53(d)(4) Siting, construction, and operation of small ground source heat pump systems that would be located in previously disturbed land
New CE. See Table 2.

§ 1970.53(d)(5) Siting, construction, and operation of small solar electric projects or solar thermal projects to be installed on an existing structure with no expansion of the footprints of the existing structure
New CE. See Table 2.

§ 1970.53(d)(6) Siting, construction, and operation of small biomass projects that would use feedstock produced on site and supply gas or electricity for the site's own energy needs
New CE. See Table 2. Class I EA: § 1940.311(c)(4).

§ 1970.53(d)(7) Construction of small (one megawatt or less) standby electric generating facilities and associated facilities for the purpose of providing emergency power for or startup of an existing facility

§ 1794.21(b)(21).

§ 1970.53(d)(8) Additions or modifications to electric power transmission facilities that would not affect the environment beyond the previously developed facility area including, but not limited to, switchyard rock grounding upgrades, secondary containment projects, paving projects, seismic upgrading, tower modifications, changing insulators, and replacement of poles, circuit breakers, conductors, transformers, and crossarms

§ 1794.21(b)(7).

§ 1970.53(d)(9) Safety, environmental, or energy efficiency improvements within an existing electric generation facility, including addition, replacement, or upgrade of facility components (such as precipitator, baghouse, or scrubber installations) that do not result in a change to the design capacity or function of the facility and do not result in an increase in pollutant emissions, effluent discharges, or waste products

§ 1794.21(b)(20).
§ 1794.21(b)(24).

§ 1970.53(e) Promulgation of Rules or Formal Notices

§ 1970.53(e) Promulgation of Rules or Formal Notices
§ 1940.310(e)(3)

§ 1970.53(f) Agency Proposals for Legislation

§ 1970.53(f) Agency Proposals for Legislation
New CE. See Table 2.

§ 1970.53(g) Administrative Actions

§ 1970.53(g) Administrative Actions

§ 1940.310(e)(4)
§ 1940.310(e)(5)

§ 1794.21(a)(2).
§ 1794.21(a)(3).

Table 2—Explanation for New Proposed Categorical Exclusions in Proposed § 1970.53

New proposed categorical exclusion
7 CFR part 1970

Explanation

§ 1970.53(a)(7) Guaranteed underwriting loans pursuant to Section 313A of the Rural Electrification Act
Under Section 313A of the Rural Electrification Act the Agency guarantees payments on bonds or notes issued by not-for-profit lenders to the Federal Financing Bank if the proceeds are used to make loans for any telephone or electric purposes, other than electric generation, consistent with the Rural Electrification Act, or to refinance bonds and notes issued for such purposes. Section 313A guarantees are not issued for specific purposes, projects or utility providers. It has been the Agency's experience for several years that the proceeds of Section 313A guaranteed bonds and notes have been used to refinance outstanding bonds and notes that are general obligations of the not-for-profit lender that are not associated with specific projects. Based on its experiences with these transactions since 2005, the Agency has determined that these proposed routine financial actions will not individually or cumulatively have a significant impact on the environment.

§ 1970.53(d)(3) Addition of telecommunication cables and related facilities to electric transmission and distribution structures
The Agency is adopting a U.S. Department of Energy CE that addresses these types of activities (CE B4.7). The U.S. Department of Commerce also has a similar CE (CE A-6). Confirming the absence of extraordinary circumstances (such as threatened or endangered species), and based on its own experience, the Agency has determined that these proposed actions will not individually or cumulatively have a significant impact on the environment.

§ 1970.53(d)(4) Siting, construction, and operation of small ground source heat pump systems that would utilize closed loops
The Agency is adopting a U.S. Department of Energy CE that addresses these types of activities (CE B5.19). Confirming the absence of extraordinary circumstances (such as threatened or endangered species), and based on its own experience, the Agency has determined that these proposed actions will not individually or cumulatively have a significant impact on the environment.

§ 1970.53(d)(5) Siting, construction, and operation of small solar electric projects or solar thermal projects to be installed on an existing structure with no expansion of the footprint of the existing structure

These systems are small (typically for single family housing or small businesses), promote the use of renewable energy, and typically disturb less than 0.25 acre.
Given the footprint restriction, confirming the absence of extraordinary circumstances (such as threatened or endangered species), and based on its own experience, the Agency has determined that these proposed actions will not individually or cumulatively have a significant impact on the environment.

§ 1970.53(d)(6) Siting, construction, and operation of small biomass projects that would use feedstock produced on site and supply gas or electricity for the site's own energy needs

These systems are small in size and typically disturb less than 0.25 acre. They are normally sited within an existing site such as a farm's manure lagoon or other waste facility to convert bio-gas (usually methane) into electricity.
Example actions include animal waste anaerobic digesters or gasifiers that would use feedstock produced on site (such as a farm where the site has been previously disturbed) and supply gas or electricity for the site's own energy needs with no or only incidental export of energy.
Given the on-site restriction, confirming the absence of extraordinary circumstances (such as threatened or endangered species), and based on its own experience, the Agency has determined that these proposed actions will not individually or cumulatively have a significant impact on the environment.

§ 1970.53(f) Agency Proposals for Legislation
This CE applies only to proposals for legislation that have no potential for significant impacts on the environment because they would allow for no or minimal construction or changes in operation.

As shown in Table 1, many CEs in § 1970.53 are based on, and consistent with, CEs found in § 1940.310, which has no applicant documentation requirements, and § 1794.21, which does not require the submission of an environmental report. In a few instances, CEs found in § 1794.22 (requiring an environmental report) or Class I EAs found in § 1940.311, both with documentation requirements, are included in a proposed § 1970.53 CE with no documentation requirements. In these instances, which are addressed in the relevant sections below, the documentation requirements would be reduced under the proposed rule.

The following paragraphs describe each of the proposed CEs in § 1970.53.

Routine Financial Actions (§ 1970.53(a))

The proposed CEs described in this paragraph apply to the following routine financial actions:

(1) Refinancing of debt, provided that the applicant is not using refinancing as a means of avoiding compliance with the environmental requirements. This is a routine financial transaction that provides financial assistance to existing businesses or other entities to facilitate their continuing operations by reducing their debt payments. This proposed CE consolidates the scope of two existing RHS/RBS CEs (see Table 1). The provisions of the proposed CE are also similar to an existing CE promulgated by the U.S. Department of the Interior (DOI) relating to routine financial actions including guarantees, financial

assistance, income transfers, audits, fees, bonds, and royalties (43 CFR 46.210(c)).

(2) Financial assistance for the purchase, transfer, lease, or other acquisition of real property when no or minimal change in use is reasonably foreseeable. “No or minimal change” is defined in the proposed rule as meaning “no or only a small change in use, capacity, purpose, operation, or design is expected where the foreseeable type and magnitude of impacts would remain essentially the same.” The condition relating to minimal change in use is currently used in § 1940.310(c)(2). This is a routine financial transaction that normally has no potential for significant environmental impacts because there is no change to existing conditions. Because Rural Housing Site Loans involve subdivision development that would have the potential for significant environmental impacts, such loans are not eligible for this CE. Since these loans are typically for subdivision developments, the Agency believes new subdivision developments should be reviewed as an EA.

This proposed CE consolidates the scope of seven existing Agency CEs (see Table 1). With respect to existing § 1794.22(a)(11), which relates to the purchase of existing facilities or a portion thereof where the use or operation will remain unchanged, the requirement of a facility environmental audit in the existing CE is included as part of staff instruction (subpart J, Environmental Risk Management).

The provisions of the proposed CE are also similar to CEs promulgated by the U.S. Department of Energy (DOE) (10 CFR part 1021, Appendix B to subpart D, B 1.24) and the U.S. Environmental Protection Agency (EPA) (40 CFR 6.204(a)(2)(vi)), which relate to the acquisition, transfer, lease, or disposition of interests in real property for reasonably foreseeable uses. By adopting these CEs, these agencies have similarly concluded that these types of actions do not result in significant environmental impacts.

(3) Financial assistance for the purchase, transfer, or lease of personal property or fixtures involving no or minimal reasonably foreseeable changes in operations. The meaning of “no or minimal change” is the same as described under proposed § 1970.53(a)(2).

This proposed CE provides a list of actions that are included under this CE. This proposed CE also includes the approval of minimal expenditures such as contracts for long lead-time equipment and purchase options by applicants. This provision was not included in 7 CFR part 1940-G, although it is consistent with § 1794.15(b)(2) and CEQ regulations (40 CFR 1506.1(d)).

This proposed CE consolidates six existing Agency CEs (see Table 1). The Agency's implementation of these existing CEs has not resulted in the imposition of significant environmental impacts. The provisions of the proposed CE are also similar to existing CEs promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 1.7 and B 1.24), EPA (40 CFR 6.204(a)(2)(vi)), and the U.S. Department of Commerce (DOC) (Department Administrative Order 216-6, A-7 and A-9), which relate to the purchase of personal property such as communications and electronic equipment.

(4) Financial assistance for operating (working) capital for an existing operation to support day-to-day expenses. This is a routine financial transaction that provides financial assistance to existing businesses for their continuing annual operating expenses. This proposed CE consolidates and simplifies the content of two existing RHS/RBS CEs (see Table 1). The Agency's implementation of these existing CEs has not resulted in the imposition of significant environmental impacts.

(5) Actions by the Agency after provision of financial assistance when those actions have no potential for significant adverse environmental impact because the actions would involve no or minimal construction or change in operations, such as foreclosure or certain consents and approvals. These actions generally include routine loan servicing actions. This proposed CE consolidates three existing Agency CEs (see Table 1), as well as two Class I EAs that have been reclassified as CEs based on Agency experience (see also Section V.C).

(6) Rural Business Investment Program actions. This CE is an existing provision under § 1940.310(c)(7), which involves actions that relate to non-leveraged program actions such as licensing by USDA of rural investment entities and leveraged program actions unless such Federal assistance is used to finance construction or development of land.

(7) Guaranteed underwriting loans issued by the Agency under Section 313A(a) of the Rural Electrification Act of 1936. This CE is new and is consistent with existing Agency practices but is presented separately for clarity. Under Section 313A of the Rural Electrification Act the Agency guarantees payments on bonds or notes issued to the Federal Financing Bank by not-for-profit lenders if the proceeds are used to make loans for any telephone or electric purposes, other than electric generation, consistent with the Rural Electrification Act, or to refinance bonds and notes issued for such purposes. Section 313A guarantees are not issued for specific purposes, projects or utility providers. It has been the Agency's experience for several years that the proceeds of Section 313A guaranteed bonds and notes have been used to refinance outstanding bonds and notes that were general obligations of the not-for-profit lender that were not underwritten for or associated with any specific projects. Based on its experiences with these transactions since 2002, the Agency has determined that these proposed routine financial actions will not individually or cumulatively have a significant impact on the environment.

Information Gathering and Technical Assistance (§ 1970.53(b))

The following proposed CEs described in this paragraph apply to routine administrative or financial assistance actions:

(1) Information gathering, data analysis, document preparation, and information dissemination. Some of the examples provided include research, literature surveys, computer modeling, conceptual design, feasibility studies, document distribution and classroom training. This proposed CE consolidates and clarifies five existing Agency CEs (see Table 1). While the proposed CE does not specifically address every activity found in the existing regulations (e.g., appraisals of nonfarm tracts and small farms for rural housing loans [§ 1940.310(b)(10)]), it is the Agency's intent that such activities are included. The description of the information gathering activities in this proposed CE is intended to be general in nature and not limited to the examples provided. The provisions of the proposed CE are similar to existing CEs promulgated by DOI (43 CFR 46.210(e) and 46.210(j)), DOC (Department Administrative Order 216-6, A-3), and EPA (40 CFR 6.204(a)(2)(iii)), which relate to data and information collection and dissemination, data analysis, and testing.

(2) Technical advice, training, planning assistance and capacity building. This proposed CE expands on five existing Agency CEs (see Table 1) and incorporates the provisions of an existing CE promulgated by DOC (Department Administrative Order 216-6, A-8) which relates to classroom-based training and exercises using existing facilities. Similar to proposed

§ 1970.53(b)(1), the description is intended to be general and not limited to the examples given.

(3) Site characterization, environmental testing, and monitoring where no significant alteration of existing conditions would occur. Example actions include air, surface water, groundwater, wind, soil, or rock core sampling; installation of monitoring wells; installation of small scale air, water, or weather monitoring equipment. This proposed CE expands on three existing Agency CEs (see Table 1) by incorporating provisions from existing CEs promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 3.1), DOI (43 CFR 46.210(e)), and EPA (40 CFR 6.204(a)(2)(iii)), which relate to information and data collection, inventory (including field study), site characterization, and environmental monitoring activities. Similar to proposed § 1970.53(b)(1), the description is intended to be general and not limited to the examples given.

Small-Scale Construction and Minor Modification Proposals (§ 1970.53(c))

The proposed CEs described in this paragraph apply to financial assistance for the following actions:

(1) Minor modifications or revisions to previously approved projects provided such activities do not significantly alter the purpose, operation, location, or design of the project as originally approved. This proposed CE consolidates two existing Agency CEs (see Table 1), as well as a Class I EA that has been reclassified as a CE based on Agency experience (see also Section V.C).

(2) Repair, upgrade, or replacement of equipment or fixtures in existing structures for such purposes as improving habitability, reconstruction, energy efficiency, or pollution prevention. These actions normally have no potential for significant environmental impacts and this CE has been modified to incorporate seven existing Agency CEs (see Table 1). The provisions of the proposed CE are also similar to existing CEs promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 2.1, B 2.5, B 3.9(b), B 5.1, and B 6.3) and EPA (40 CFR 6.204(a)(1)(i)), which relate to routine maintenance, workplace enhancements, and facility safety and environmental improvements to an existing facility such as reducing emissions and waste generation, and conserving energy.

(3) Any internal modification or minimal external modification, restoration, renovation, maintenance and replacement in-kind to an existing facility or structure. These actions normally have no potential for significant environmental impacts. This proposed CE has been modified to incorporate nine existing Agency CEs (see Table 1). The provisions of the proposed CE are similar to an existing CE promulgated by DOC (Department Administrative Order 216-6, A-1,), which relates to minor renovations and additions to buildings, equipment, and grounds that do not result in a change to the functional use of the property.

(4) Construction of or improvements to a single-family dwelling or a multi-family housing project serving up to four families, except when financing is provided through a Rural Housing Site Loan. Rural Housing Site Loans are typically for subdivision developments and the Agency believes new subdivision developments should be reviewed as an EA. However, it is the Agency's intent that this proposed CE include the financing of housing construction or the approval of lots in a previously approved Agency subdivision, as found in existing § 1940.310(b)(8). This is a routine financial transaction that the Agency has conducted extensively over the past 26 years and for which no significant adverse effects have resulted. This proposed CE has been modified to incorporate five existing RHS/RBS CEs (see Table 1).

(5) Siting, construction, and operation of new or additional water supply wells for residential, farm, or livestock use. This is a routine financial transaction that normally has no potential for significant environmental impacts. This proposed CE has been modified to incorporate two existing Agency CEs (see Table 1). The provisions of the proposed CE are similar to an existing CE promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 1.18), which relates to the siting, construction, modification, and operation of water supply wells.

(6) Modifications of an existing water supply well to restore production in existing water well fields, if there would be no drawdown other than in the immediate vicinity of the pumping well, no resulting long-term decline of the water table, and no degradation of the aquifer from the new or replacement well. This is a routine financial transaction that normally involves reviewing plans and information from State regulatory and permitting agencies and normally has no potential for significant environmental impacts. This proposed CE includes an existing RUS CE (see Table 1), and also incorporates provisions similar to a CE promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 1.18), which relates to the siting, construction, modification, and operation of water supply wells.

(7) New utility service connections to individual users or construction of utility lines or associated components where the applicant has no control over the placement of the utility facilities. This proposed CE includes an existing RUS CE (see Table 1).

(8) Conversion of land in agricultural production to pastureland or forests, or conversion of pastureland to forest. This is an action that normally has no potential for significant environmental impacts. This proposed CE includes an existing RHS/RBS CE (see Table 1).

(9) Land-clearing operations of no more than 15 acres, provided any amount of land involved in tree harvesting is to be conducted on a sustainable basis and according to a Federal, State, or other governmental unit approved forestry management plan. This is an action that normally has no potential for significant environmental impacts. This proposed CE includes an existing RHS/RBS CE (see in Table 1).

Small Energy or Telecommunications Proposals (§ 1970.53(d))

The proposed CEs described in this paragraph apply to financial assistance for the following actions:

(1) Changes to existing telecommunication facilities or electric distribution and transmission lines that involve pole replacement or structural components only where either the same or substantially equivalent support structures at the approximate existing support structure location are used. This is a routine action that extracts a component of the existing 7 CFR 1794.22(a)(5) to encompass pole replacement which the Agency has determined, based on past experience, does not result in significant impact to environmental resources. The threshold reference in the existing regulation (i.e., less than 20 percent pole replacement) was not included. Instead, the Agency added provisions that are similar to an existing CE promulgated by the Bureau of Land Management (BLM) (Department of the Interior Departmental Manual 516, Chapter 11, E 13), which relates to upgrading of existing facilities which involve no additional disturbances outside the right-of-way boundary. Such provisions help ensure that there is no potential for significant impact.

(2) Phase or voltage conversions, reconductoring, or upgrading of existing electric distribution lines or telecommunication facilities. This is routine action that normally has no potential for significant environmental

impacts and which includes an existing RUS CE (see Table 1). The provisions of the proposed CE are also similar to an existing CE promulgated by DOC (Department Administrative Order 216-6, A-5), which relates to upgrading of existing radio communication towers that do not require ground disturbance; and by BLM (Departmental Manual 516, Chapter 11, E-16), which relates to acquisition of easements for an existing road or issuance of rights-of-way for use of existing facilities or improvements for the same or similar purpose.

(3) Addition of telecommunication cables and related facilities to electric transmission and distribution structures. The provisions of this proposed new CE are based on a similar CE promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 4.7) for adding fiber optic cable to transmission facilities or burying fiber optic cable in existing powerline or pipeline rights-of-way (see Table 2).

(4) Siting, construction, and operation of small ground source heat pump systems that would be located in previously disturbed land. These systems are very small (typically for single family housing or small businesses), promote the use of renewable energy, and typically disturb less than 0.25 acre of previously disturbed land. For these reasons, the Agency has determined that this proposed new CE is a routine action that normally has no potential for significant environmental impacts. This proposed CE is also similar to a CE recently promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 5.19) for the installation, modification, operation and removal of commercially available small-scale ground source heat pumps to support operations in single facilities (such as a school or community center) or contiguous facilities (such as an office complex) (see Table 2).

(5) Siting, construction, and operation of small solar electric projects or solar thermal projects to be installed on an existing structure with no expansion of the footprint of the existing structure. These systems are small (typically for single family housing or small businesses), promote the use of renewable energy, and typically disturb less than 0.25 acre. For these reasons, and the fact that the activity would occur within an existing footprint (already disturbed), the Agency has determined that this proposed new CE is a routine action that normally has no potential for significant environmental impacts (see Table 2).

(6) Siting, construction, and operation of small biomass projects, such as animal waste anaerobic digesters or gasifiers that would use feedstock produced on site (such as a farm where the site has been previously disturbed) and supply gas or electricity for the site's own energy needs with no or only incidental export of energy. These systems are small and typically disturb less than 0.25 acre. They are normally sited within an existing and previously disturbed site such as a farm's manure lagoon or other waste facility to convert bio-gas (usually methane) into electricity, and include no or only incidental export of energy. This type of proposed action is currently included as a Class I EA in § 1940.311(c)(4) (see also Section V.C). All of the EAs prepared for these types of actions have resulted in FONSIs. For this reason, the Agency is proposing that these actions should be classified as eligible for a new CE (see Table 2).

(7) Construction of small standby electric generating facilities of one megawatt or less total capacity and associated facilities, for the purpose of providing emergency power for or startup of an existing facility. This is a routine action for emergency preparedness purposes at existing sites and typically disturbs less than 0.25 acre. This proposed CE includes an existing RUS CE (see Table 1).

(8) Additions or modifications to electric power transmission facilities that would not affect the environment beyond the previously developed facility area including, but not limited to, switchyard rock grounding upgrades, secondary containment projects, paving projects, seismic upgrading, tower modifications, changing insulators, and replacement of poles, circuit breakers, conductors, transformers, and crossarms. This proposed CE includes an existing RUS CE (see Table 1). The provisions of the proposed CE are also similar to an existing CE promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 4.6), which relates to the additions and modifications to transmission facilities.

(9) Safety, environmental, or energy efficiency improvements within an existing electric generation facility, including addition, replacement, or upgrade of facility components (such as precipitator, baghouse, or scrubber installations), that do not result in a change to the design capacity or function of the facility and do not result in an increase in pollutant emissions, effluents discharges, or waste products. This proposed CE includes two existing RUS CEs (see Table 1). The provisions of the proposed CE are also similar to an existing CE promulgated by DOE (10 CFR part 1021, Appendix B to subpart D, B 5.1), which relates to actions to conserve energy and promote energy efficiency.

Promulgation of Rules or Formal Notices (§ 1970.53(e))

This paragraph proposes to categorically exclude the promulgation of rules or formal notices for policies, programs, or projects that have no potential for significant environmental impacts because they would allow for no or minimal construction or changes in operations. This proposed CE would apply to the vast majority of Agency rules or notices regarding new or revised existing programs where the proposed implementation has no potential for significant adverse environmental impacts because they involve no or minimal alterations in the physical environment and typically occur on previo

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2014-00220. Public record. Not legal advice.